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In fiscal 2011, the Compensation Committee also set operating income target thresholds for fiscal 2011 cash
incentive awards at $433 million, $450 million and $466 million for payouts of 10%, 50% and 100%,
respectively, of each Named Executive Officer's eligible cash incentive bonus amount as determined by such
Named Executive Officer's 2011 performance rating. These target levels were set over 75% higher than the
target levels set for fiscal 2010 to incentivize our Named Executive Officers to achieve increasingly higher levels
of operating income.
Our outstanding financial performance continued in fiscal 2011, in which we again reported record levels of
operating income, driven by double-digit sales growth across all of our major brands, product categories and
geographic markets. Our operating income increased 25.4% to $472.0 million, compared to fiscal 2010, which
exceeded the maximum operating income target set by the Compensation Committee for the payment of cash
incentive awards in fiscal 2011. As a result, each Named Executive Officer received 100% of his or her eligible
cash incentive bonus amount as determined by such Named Executive Officer's 2011 performance rating. Cash
bonus amounts were paid in the first quarter of fiscal 2012, but are reported in the Summary Compensation Table
under 2011 pursuant to the rules of the SEC.
Compensation Program
Compensation Program Objectives and Philosophy
Our compensation objectives are to maintain competitive pay practices that will enable us to attract, retain
and reward executives who are capable of leading us in achieving our strategic business objectives. To meet
these goals, we use base salary, performance-based short-term incentive compensation and long-term
equity-based incentive awards. We believe this mix of short-term and long-term compensation rewards and
reinforces the value-added contributions and attainment of performance objectives that aid us in achieving
profitability goals and creating stockholder value. A significant portion of senior management's compensation is
equity-based in order to emphasize the link between executive compensation and the creation of stockholder
value as measured by increases in the price of our shares of Common Stock.
We utilize external benchmarking data and a comparable peer group to establish competitive total
compensation pay practices that are appropriate for our industry. We evaluate employees' compensation on an
annual basis and make changes accordingly. We also take into consideration current economic conditions and our
financial projections. We target overall compensation to be at the 50th percentile of the companies that we
believe comprise our industry peer group and with whom we believe we principally compete for executive
officer candidates.
Although portions of our compensation program are performance-based, we do not believe that the risks
arising from our compensation policies and practices for our employees are reasonably likely to have a material
adverse effect on our company. In making this determination, our Head of Human Resources (the "Head of HR")
and our Compensation Committee evaluated the risk profile of the Company's compensation programs and
policies. In performing this evaluation, the Head of HR and the Compensation Committee looked at each element
of compensation and the associated risks and mitigating factors for each element of compensation. Specifically,
the evaluation included the mix of short-term and long-term incentive compensation, extended vesting periods
for long-term equity awards, the mix of corporate and specific business unit measures used in assessing
performance, the use of multiple performance review criteria, the Compensation Committee's discretion in
making individual awards and caps on individual compensation awards.
Overview of Compensation Program Design
Our compensation program is designed to achieve our objectives of attracting, retaining and motivating
employees and rewarding them for achievements that we believe will bring us success and create stockholder
value. This program is designed to be competitive with the companies in the industry with which we compete for
talent. A significant portion of the compensation for our Named Executive Officers includes annual long-term